Many of us already know how time consuming and also expensive the errors are in accounting, if you make a mistake in the financial statement of your small business. You definitely need to stop making some common accounting errors to protect the small business of yours. Find an Local Accountant in UK, to do the accounting tasks of your small business for you.
Accounting error is very common but one should avoid any mistakes. There many things one can do to avoid this
Here are 10 common mistakes you should be avoiding:
- Errors in Data Entry
All business transactions you record have to be complete and accurate. With erroneous information entries in account books, an inaccuracy of financial health becomes prominent. You will file government forms incorrectly which can lead to penalties.
- Omission Errors
If you fail to enter a business transaction it will result in serious accounting mistakes. As you haven’t recorded some business expenses, it can lead to no tax reductions.
- Too Much Time Spending on Tasks
Wasting too much time in an accounting process is not applicable as that time can be used to generate revenue. As you are small business owner you must focus on how to bring more money to your company.
- Trashing Receipts
If you throw away any receipts, it destroys the proof of any transaction which might be required in some time. Receipts are required to show consistency in accounting books. To prepare for an audit, receipts are very important.
- Mixing Business and Personal Funds
You must avoid using same accounts for both personal and business purposes. It can create mess your finances. Confusion of transactions will be big and it will be very difficult to handle.
- Assuming Profits and Cash Flow as Same
When you are managing your finances you must treat the cash flow and profits differently. Though both cash flow and profit deal with the income and the expenses, measuring of money is different for them. Sometimes business owners confuse these two and think that they have more money than they actually do.
- You Haven’t Reconciled Your Financial Books with the Bank Statements
Do not forget to make entries in your account book every time. You must double check your books to ensure their accuracy of data. When you fail to reconcile your finance books, it could lead towards such errors that might stay unnoticed for a longer period of time. It becomes harder to correct the mistakes if you leave them for long time. You can catch the mistakes earlier with bank statement reconcilation.
- Failing to Go with the Budget
It is important to plan ahead of time but when it comes to running a business people often overlook that aspect. It is easier to plan your next move if you create a budget. Budget focuses on your goals. It helps to increase profits. With budget you get know where your money is coming from and also where it is going to. Adapting to change becomes easier for you if you make a budget.
- Not Measuring The Progress
Never forget to notice the bigger picture of your business. You must know how you are doing in your business because otherwise you won’t be able to improve it. When you measure your business performances, you can spot both weak and strong points in your process.
- Ignoring Signs of Needing Any Help
You must know when it is time for you to pass your accounting responsibilities to Accountants Services in UK. As your business grows you must delegate your tasks. You don’t earn money from accounting even if you invest time in accounting. Pass your bookkeeping responsibilities to an expert.